EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1124302
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Bluescope Steel (AIS) Pty Ltd applied for a TCO in respect of certain gear assemblies on 21 July 2011.
Instrument
TCO No 1124302 was made on 17 October 2011. It declares that those certain gear assemblies are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 1124302 is taken to have come into force on 21 July 2011.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Tariff Concession Instrument No. 1124302, made under the Customs Act 1901, was enacted to provide a tariff concession for certain gear assemblies, reducing the customs duty from the general rate of 5% to free. The instrument was introduced to address the need for tariff concessions in specific cases where no substitutable goods were being produced in Australia. The instrument was issued following an application by Bluescope Steel (AIS) Pty Ltd on 21 July 2011, and it was registered on 17 October 2011. The Tariff Concession Order was made after the Chief Executive Officer of Customs determined that the application met the core criteria, as no substitutable goods were being produced in Australia. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the day the concession is deemed to have come into force. This instrument was enacted by the relevant authority under the Customs Act 1901, aiming to streamline the tariff process for specific imported goods.
Scope and Application
The Customs Act 1901 establishes a framework within which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) to reduce the customs duty on specific goods. These concessions apply to goods specified in a TCO, provided the application for such an order meets the core criteria set out in the Act. The application process involves assessing whether the goods in question are substitutable by Australian-made products and whether they are produced in Australia in the ordinary course of business. If the application is approved, the CEO issues a written order reducing the duty on the specified goods. In the case of Tariff Concession Instrument No. 1124302, certain gear assemblies were granted a duty-free status under item 50 of Schedule 4 to the Customs Tariff Act 1995. The TCO applies to the applicant, Bluescope Steel (AIS) Pty Ltd, and affects the rights of importers, allowing them to apply for duty refunds on goods imported since the TCO's effective date, without imposing any new liabilities on other parties. This instrument operates under the Commonwealth jurisdiction and is not subject to state or territory laws.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1124302 (subsection 269P(3) and section 269K(1) of the Customs Act 1901) require the Chief Executive Officer (CEO) of Customs to make a written order, known as a Tariff Concession Order (TCO), when an application is submitted and the core criteria are met. This process ensures that the CEO considers whether the goods in question are not produced in Australia and that no substitutable goods exist that could potentially be produced domestically (sections 269C and 269SJ). Once the CEO is satisfied with the application and the core criteria are met, a TCO is issued, which applies a prescribed rate of customs duty, in this case, a concessional rate of duty of free (section 269P(3)). The CEO is also required to publish a notice in the Gazette, inviting any interested parties to lodge submissions opposing the TCO if they believe there are reasons it should not be granted (subsection 269K(1)).
The Customs Act 1901 imposes several obligations on parties involved with the TCO process. For applicants, such as Bluescope Steel (AIS) Pty Ltd, the obligation is to ensure their application for a TCO meets the criteria outlined in the Act, particularly that the goods in question are not produced in Australia and no substitutable goods are produced domestically. The CEO, on the other hand, must review the application against these criteria and, if satisfied, make a written TCO (subsection 269P(3)). Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting the application as valid, providing an opportunity for any interested parties to make submissions (subsection 269K(1)).
Failure to comply with the provisions of the Customs Act 1901 can lead to various consequences. If an entity submits an application that does not meet the core criteria or provides false information, it may face penalties for providing misleading or deceptive information. The maximum penalty for such an offence is $11,000 for individuals and $55,000 for corporations (subsection 269R(2) of the Customs Act 1901). Additionally, any person who contravenes the Act by failing to comply with the requirements for a TCO may face further penalties, including fines and potential legal action. However, the explanatory statement does not specify any additional penalties beyond those for providing misleading or deceptive information.
The Tariff Concession Order No. 1124302, which came into force on 21 July 2011, provides a lower rate of customs duty on certain gear assemblies, reducing the general rate of 5% to a concessional rate of free. This order benefits importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any liabilities on any person and does not affect the rights of a person as at the date of registration, ensuring that no party is disadvantaged by the order. The rights of importers, however, are beneficially affected, as they can now take advantage of the reduced duty rate.